This week’s tip of the week is especially important for new coin and bullion investors, a it addresses the topic of how not to buy gold and silver coins. While there are plenty of honest and reputable coin dealers in the industry, this isn’t the case across the board, so new investors should be especially careful when entering the market.
In a nutshell, there are bullion and numismatic gold and silver coins. Bullion coins are usually of interest to individuals that are interested in purchasing gold and silver at the cheapest prices possible. These individuals are primarily buying gold and silver coins as a hedge against inflation, currency collapse and economic collapse. They also are interested in acquiring coins in the event they at some point in the future need to be used for bartering. These individuals would be best off investing in 90% U.S. silver coins, American gold and silver eagles, .999 fine silver rounds and bars and recognizable low premium foreign gold and silver coins.
Numismatic, or collectible coins, on the other hand, are typically purchased by individuals that are interested in buying coins not only for their intrinsic gold and silver value, but also for their historical significance and collect-ability. Much like fine art or highly valued wine, they believe that the rarity of the item will continue to increase in value over time. Many numismatic coins are encapsulated by third party grading companies, such as PCGS or NGC, but that isn’t always the case. In addition to professionally graded coins, proof coins, pre-1933 U.S. gold coins, old copper coins, uncirculated silver dollars and key date Morgan and Peace silver dollars, just to name a few, are of interest to this group.
The profit margin on numismatic or collectible coins is typically higher for coin dealers, so it’s not uncommon for coin dealers to try and sell these higher margin coins to individuals that are new to buying gold and silver coins. Rather than try and push a particular type of coin, coin dealers should ask the individual or couple the primary reason for buying gold or silver coins so that they can recommend the best options to meet their long term goals.